CEO interview: Digi-Key builds for the future: Page 2 of 3

December 12, 2017 //By Peter Clarke
CEO interview: Digi-Key builds for the future
Broad-line distributor Digi-Key (Thief River Falls, Minnesota) is on the rise. Digi-Key had global sales of $1.84 billion in 2016 and in preparation for a busier future it is quadrupling the size of its distribution facilities in Thief River Falls, Minnesota.

The company growth has been averaging 2.5 times market growth, Doherty said. Although that is not set to happen in a 2017 where the chip market is expected to grow by an unusually high 20 percent, partly down to strong average selling prices in memory. "You have to remember that 80 percent of the distribution market is the high-volume stuff," he said.

Is that where Digi-Key has to go next to continue its climb up the distributor company rankings? "Digi-Key addresses the short- to medium-run – but never say never," responded Doherty. Buit he also puts the arguments for staying in the sweet spot Digi-Key currently occupies. Doherty pointed out that micro-manufacturing is becoming more popular and in any case, high-volume distribution provides less opportunity to add value through support.

IoT suits Digi-Key

Doherty also pointed out that the rising tide of the Internet of Things was also something that played to Digi-Key's strength. IoT is a highly fragmented market that has many relatively low volume applications being addressed by a large number of companies. IoT applications fall into all the sectors Digi-Key is already supporting.

"It is driving us to bring more sensors and actuators on to our books. And customers want us to vet out stuff that doesn't work. That's why we've brought on 100 suppliers with IoT lines across semiconductors, passives and connectors," said Doherty. Reflecting industry trends Digi-Key is also offering more board-level and even system-level solutions, he said. "Development boards – such Beagle boards and Raspberry Pi – are also breaking into commercial embedded applications."

Digi-Key European sales ($1 = €0.862 = £0.759). Source: Digi-Key

Digi-Key has about 90 engineers out of its total work force of over 3,500 employees, working on thousands of applications with customers. But it has too many product lines to support all of them. It cannot be like a specialist distributor with field application engineers for all its lines. In addition to engineering support and perhaps more importantly Digi-Key aspires to be the easy-access curator of engineering data for the industry. The company’s website does feature a broad collection of technical resources, multimedia content and a portfolio of design tools.

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